Corbett signs budget, vetoes millions in legislative funding, urges action on public pensions

Gov. Tom Corbett signed the state budget 10 days late on Thursday and used his line-item veto to strike $65 million from the General Assembly's own appropriation, urging a renewed effort to curb public-sector pension benefits for newly hired teachers and state workers

Corbett, a Republican, said he wanted to avoid any more school districts raising property taxes to cover their pension obligations, and criticized the GOP-controlled Legislature for refusing to contribute any of its approximately $150 million surplus to help state government close a massive deficit.

He cut $7.2 million in earmarks and other spending items picked by lawmakers, noting that the proposal sent to him last week increased the General Assembly's own $320 million budget by 2 percent and included $5 million for parking.

"They filled the budget with discretionary spending and then refused to deal with the biggest fiscal challenge facing Pennsylvania, our unsustainable public pension system," Corbett said in a Capitol news conference.

The pension systems represent a growing financial strain on state government and local school districts, but despite pressure from Corbett over the past couple years, no deal has made it to his desk.

He said lawmakers left Harrisburg "with unfinished business. They need to come back and enact pension reform."

The governor's actions did not affect a bill hung up in the Legislature to increase in Philadelphia's sales tax on cigarettes that city officials say is crucial to ensuring the city's schools have enough money to open in the fall.

The Republican-penned state budget plan passed both chambers without a single vote from a Democrat, and Corbett has said that his administration did not agree to all the final details.

The big task for Republicans was to address a massive and unexpected collapse in tax collections that tore a gaping $1.7 billion hole into the $29.4 billion budget plan that Corbett proposed in February. The one he signed Thursday was $29 billion.

It does not increase taxes and is supported by an approximately 3 percent revenue growth projection.

Under the plan, spending would increase $651 million, or 2.3 percent, over the current year's approved budget. Another $220 million would be added to the books of the nearly ended fiscal year, rather than the new fiscal year, making the entire package an $871 million increase, or about 3.1 percent.

The new spending goes largely toward public schools, prisons, pension obligations, health care for the poor and social safety-net programs. To plug a massive deficit, it relies on more than $2.5 billion in one-time stopgaps to plug a massive deficit, the biggest use of stopgaps outside of the three years around the Great Recession.

The stopgaps include postponing nearly $400 million in Medicaid payments, raiding off-budget programs and draining reserves.

Democrats had proposed making up the shortfall by expanding Medicaid under the 2010 federal health care law, delaying planned tax cuts for businesses and increasing taxes on natural gas extraction and sales of tobacco products.

While Senate Republicans had entertained the idea of a tax increase, House Republicans blocked it and Corbett had insisted he would not approve a tax increase without action on pension legislation.